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Shuanghui Hires Banks for Up to $6b HK IPO.

06 November 2013

HONG KONG - China's Shuanghui International Holdings, which bought US pork producer Smithfield Foods Inc this year, has hired six banks for a Hong Kong IPO, seeking to raise up to $6 billion in what is set to be Asia's Pacific ex-Japan's largest offering in about four years.

The Shuanghui IPO plans were first revealed by Reuters in July when sources said the combined Shuanghui/Smithfield company would have a value of about $20 billion.

The IPO would provide Shuanghui's private equity investors with an exit route from their investments and bring to fruition long held listing plans, sources previously told Reuters. Shuanghui could also use the proceeds to pay down debt used to acquire Smithfield, people familiar said.

Shuanghui paid $4.7 billion to buy Virginia-based Smithfield, the world's biggest hog producer, in China's largest ever acquisition of a US company. Including debt, the Smithfield acquisition was valued at $7.1 billion.

Despite political opposition, the deal closed in September, allowing Shuanghui to directly sell Smithfield pork products across China to meet the country's huge demand for the product. Shuanghui International owns a 73.26 percent stake held directly and indirectly in Henan Shuanghui Investment & Development Co.

Hong Kong stock exchange rules require one year of ownership before a merged entity can list. IFR said the IPO is expected in the second quarter of 2014.

The main rationale behind a Hong Kong initial public offering (IPO) versus a US listing is the likely higher value the merged entity would command, the people familiar said.

At $6 billion, the IPO would be the biggest in Asia Pacific since AIA Group's $20.5 billion listing in October 2010.